Editorial: Goldcorp counts ounces in Quebec, Mexico

It was a busy period in the field and the board rooms for North America’s miners during the last week of the second quarter, the 26th trading week of 2007.

* Canada’s second-largest gold miner, Goldcorp, tabled a long-anticipated first resource estimate for its lonore high-grade gold deposit in Quebec’s James Bay region, one of the best greenfield discoveries in Canada of the past decade. While lonore’s Roberto zone now hosts an indicated 1.8 million oz. gold plus another 929,000 oz. gold in the inferred category, Goldcorp is confident it can propel the tally past the 5-million-oz. mark.

In Mexico, Goldcorp has significantly expanded the size of its Penasquito zinc-silver-gold-lead deposit, though the grades are down significantly. The 110 million tonnes of heap-leachable oxide ore grade a scant 0.18 gram gold and 18.1 grams silver per tonne, while the 807 million tonnes of sulphide ore are a bit richer, but still quite lean. Mine startup is slated for next year. With roughly four-fifths of Penasquito’s production slated to come in the form of zinc, silver and lead, Goldcorp’s ability to sell Penasquito to the Street as foremost a gold project shows tremendous marketing skill.

The good news didn’t end there, with Goldcorp celebrating its first gold pour from its Los Filos mine in Mexico’s Guerrero state.

* In one of the more unusually structured deals we’ve seen, Yamana Gold unveiled a planned merger with Northern Orion Resources that is contingent on a successful hostile takeover of Meridian Gold. In contrast to Goldcorp’s attitude towards predominantly non-gold assets like Penasquito, Yamana is being careful to balance Orion’s copper with Meridian’s gold, and so keep relatively unchanged the gold weighting of its portfolio to retain the gold premium built into its stock price.

While Yamana has not yet officially tabled an offer to Meridian shareholders, Meridian’s board has already pooh-poohed the idea, saying the 14.9% premium being offered “does not reflect the value of Meridian Gold’s proven, high-quality, precious metals-focused asset base.”

Although a solid company and a market darling in the late 1990s, Meridian suffered a major blow when its high-quality Esquel gold project in Argentina was stopped by local protesters in 2003, leaving it essentially a one-mine company with little room to manoeuvre against a hostile bid.

* Lundin Mining raised its bid for Rio Narcea Gold Mines by 10% to $5.50 per share and extended the bid to July 16. Lundin noted that it had lock-up agreements with shareholders owning 31% of Rio Narcea’s shares, and a further 12.3% were ready to hand over their shares to the raised offer. Over the holiday weekend in Canada, Rio Narcea’s board recommended its shareholders accept the offer. Ever the multi-tasker, Lundin managed at the same time to close its merger with sister company Tenke Mining, effective July 3.

With mining head offices disappearing in Toronto, Vancouver is becoming a noticeably more significant player in mining’s big leagues, with Lundin Mining growing by leaps and bounds, Teck Cominco on a long-term growth trajectory, and Goldcorp relocating to the city from Toronto a couple of years back.

* This week, the Arctic countries of the West were subjected to another round of Soviet-style bullying from the great Russian bear, with the Kremlin laying claim to a vast, 1.2-million-sq.-km chunk of the Arctic Ocean, including the North Pole, owing to a purported extension of Russia’s continental shelf to include the entire Lomonosov ridge, which spans 1,800 km from the New Siberian Islands over the top of the world to Canada’s Ellesmere Island.

This goes against international law, which stipulates that no country owns the North Pole and that Russia, the United States, Canada, Norway and Denmark are all limited to 320-km economic zones around their coasts.

The Russian claim was made upon the return of a group of Russian geologists from a 6-week voyage on a nuclear icebreaker along the Lomonosov ridge. The scientists said the ridge holds the potential to host huge deposits of gas and oil that could be more easily tapped if the artic ice sheets melt in the decades ahead.